Still no date for special session

More than one month after Gov. Susana Martinez called for a special session of the New Mexico state Legislature, elected officials and staff still have not set a date to reconvene and fix the dire state budget. Aside from the age-old tax or cut argument, officials continue to debate the possibility of siphoning unspent money from even education funds.

State tax revenues have been hit hard over the last year by a steep and sustained drop in oil and gas prices around the world. Even as the regular session ended in March, many elected officials called for what they thought was an inevitable special session. It is up to the Governor’s Office to call the Legislature back when needed.

Martinez waited until final fiscal year 2016 numbers were back, in mid August, to do so. Her call came with a speculative date in September for what she hoped would be a one-day session. That it is now Sept. 20 and the administration has still not set a date worries several members of the Legislative Finance Committee, including local District 28 Democratic Sen. Howie Morales.

“I am concerned, because the longer we wait, the bigger the impact,” Morales said.

“My biggest concern with the delays that are taking place is for the agencies who will have to make changes if there are cuts,” said District 35 Democratic Sen. John Arthur Smith. “We no longer have 12 months for agencies to make their adjustments. They’re now going to have to make those cuts in an eight-month period. The money has already been distributed. That is going to make it all the more painful.”

Smith also said the problem gets worse the later in the year it gets, especially for government agencies whose cash reserves on which some legislators now have their eye. Those include the state Public Education and Higher Education departments.

Legislative Finance Committee staff said the average school district in New Mexico currently has around a 10 percent cash reserve. Those are being considered closely by many in Santa Fe as higher than need be and available to siphon.

“We have looked at sweeping accounts we believed to have surpluses,” Smith said. “But the Senate Democrats have been reluctant to cut education at this stage.”

District 39 Republican Rep. John Zimmerman said that in Santa Fe those cuts to funds in which money is “just sitting there” are referred to as “sanding” and that it is certainly on the table.

“We may sand some of those funds if we attempt to address the fiscal year 2017 budget,” Zimmerman said.

As some legislators look to cut recurring funds like education reserves, some Senate Democrats look elsewhere for ways to tighten the state’s belt.

“The bottleneck now appears to be a real reluctance to change any tax loopholes at this time,” Smith said. “On those loopholes, we have to come up with a more stable point of revenue. People in the oil and gas industry told us back in June that they didn’t see a reasonable time frame for a recovery in the industry.”

“We have a $6 billion budget in the state of New Mexico, yet we give out $1 billion in corporate tax incentives that haven’t shown us the return on investments,” Morales said. “We need to see which investments are returning and which need to be investigated.”

While legislators continue to debate where cuts need to be made, staff from both the New Mexico Department of Finance and Administration and Legislative Finance continue to work together in search of one-time funds from which to draw.

“Staff are negotiating now to put together various options,” said New Mexico House Speaker Don Tripp. “But there have been no agreements yet.”

The most public of these one-time funds is the Tobacco Settlement Permanent Fund, which was originally awarded to the state by big tobacco companies in 2000, then paid into each year.

“Right now we have an agreement for 2016,” Smith said. To fill the more than $130 million hole in the state coffers left by the year which ended on June 30, the Legislature will look to the tobacco fund. “We have to take the tobacco settlement money because we have no other money.”

That still leaves fiscal year 2017, which began on July 1, with a deficit projected to be up to $500 million.

As to that, Legislative Finance Committee Director David Abbey said he has seen legislators in both houses and both parties make inroads.

“Groundwork and good analysis has been set,” he said. “And there is rapid progress in making bills.”

Tripp and Morales told the Daily Press they have heard rumors of a date in the week of Sept. 26. No one, however, has heard anything exact from the Governor’s Office.

What that special session will look like, though, is up to Martinez.

“There are a lot of solutions out floating,” Zimmerman said. “None of them are concrete until we get into special session. Then it’s anything goes. We’re required by statute to balance the budget. A lot will depend on what the governor authorizes.”

One option is to focus just on transferring the money from the tobacco settlement to fix the fiscal year 2016 deficit and leave the fiscal year 2017 deficit alone until the regular session in just over three months.

“I don’t want to go in and just address the 2016 budget,” Morales said. “So much more is needed and we cannot keep pushing it back.”

One argument for keeping the special session to the 2016 budget is that it would cut down on the expense necessary to open up the Legislature for more than one day, according to Zimmerman.

It could also open up room for other issues the governor has expressed interest in including on the special session agenda — such as reinstating the death penalty for at least those who murder children or kill law enforcement officers. Smith said Martinez had mentioned the possibility of including those in their discussions concerning the special session.

“The truth as we know it,” Zimmerman said, “is that we won’t know for sure until we’re up there.”